Changes in law needed to fix glitches in tax system: SC judge

Kolkata, Sep 2 (IANS) Amid continuous clarifications and notifications from the Centre and challenges being faced by businesses since the implementation of the Goods and Services Tax (GST), a Supreme Court judge on Saturday said modifications are required to remove the defects in the taxation system.

“Technical experts have to work out (to solve the problems). Law making is not a one-time affair…it is a continuous one. Every policy, every law will have defects or shortcomings but they can be overcome,” Justice Adarsh Kumar Goel said on the sidelines of the National Tax Conference organised by the All India Federation of Tax Practitioners (AIFTP)-Eastern Zone.

“Changes in tax structure from time to time are a must to strengthen the basic defects in a tax system to mitigate the hardship of taxpayer and to enhance the revenue of state, so that there is no deficit in the developmental activities,” he said.

He also said that a sound taxation policy ensured adequacy of funds without any undue pain to the taxpayer and urged the tax practitioners to formulate remedial actions to resolve the problems emerging in the GST regime.

“There are many issues which will be sorted out by the government. That is what the Centre said. GST is a new system and everything cannot be thought of at the beginning. Trial and error method will continue in resolving the teething problems. We are hoping that the teething problems will be sorted out,” AIFTP’s Direct Tax Committee’s Chairman Narayan Jain told IANS.

However, the Federation’s member and chartered accountant S. Venkataramani felt that the government was issuing notifications, circulars, FAQs and amendments to law “without considering the ground reality of businesses”.

“While businesses are willing to comply, the hardware and software of the government is mostly non-functional. So we do not know how to proceed. The government said tax credit system in the GST would be seamless but the restrictions of credit in the sections, rules and notifications outweigh the benefits,” Venkataramani said, adding that many of the government officials were not adequately trained.

He also said: “Dealers are going slow in invoicing due to threats. They (dealers) prefer to wait and watch even though they face consequences in terms of penalty and fine for delaying in filing the return. They are not sure about how much input tax credit they would get.”

The experts said the success of the complex tax reforms would depend on the glitch-free running of the GST network or GSTN, the technological backbone for the new tax concept.